Emkay
Godawari Power and Ispat
Research
Backward integration – major booster
Paragon Center, H -13 -16, 1st Floor, Pandurang Budhkar Marg, Worli, Mumbai – 400 013.
17
th
December 2009
BUY
Price
Target Price
Rs170
Rs261
Sensex – 16,913
Price Performance
(%)
1M
3M
6M
12M
Absolute
20
18
58
144
Rel. to Sensex 21
15
36
44
Source: Bloomberg
Stock Details
Sector
Metals & Mining
Reuters
GDPI.BO
Bloomberg
GODPI@IN
Equity Capital (Rs mn)
281
Face Value (Rs )
10
Number of shares o/s (mn)
28
52 Week H/L (Rs )
184/42
Market Cap (Rsbn/USDmn)
5/107
Daily Avg Vol (No of shares)
346364
Daily Avg Turnover (US$ mn)
1.2
Shareholding Pattern (%)
30/09/09 30/06//09 31/03/09
Promoters
59.0
58.7
58.1
FII/NRI
5.7
7.3
8.1
Institutions
4.8
7.0
6.9
Private Corp.
8.8
7.3
7.2
Public
21.8
19.7
19.7
Chirag Khasgiwala
chirag.khasgiwala@emkayshare.com
+91 22 6612 1254
We recently met the management of Godawari Power and Ispat Ltd (GPIL) and came
out with a positive view on the stock. GPIL has embarked upon backward integration
program with 0.6mtpa pelletization plant, 14mt captive iron ore mines and setting up
additional 20MW captive power plant. The pellet plant is expected to be operational by
Dec ’09 end helping GPIL to increase sponge iron capacity utilization and also to
increase the topline and bottomline with the surplus pellet sales in the market. GPIL
had already commenced Ari Dongri (Chhattisgarh) iron ore mine, having reserves of
7mt. The company is also under the process of commencing Borai Tibbu
(Chhattisgarh) iron ore mine, having reserves of 7mt, in next 3-4 months. This will lead
to significant reduction in cost of production, generating savings of around Rs2,000/t
of sponge iron. Additonal 20MW captive power plant, which will be operational by Dec
’09, will be available for selling in merchant market, generating incremental margins.
GPIL is expected to report earning CAGR of 60% for the per